In a nutshell - you can't scale to infinity. And that is what the manufacturers have done. They didn't think about saturation and product life cycle. We see manufacturers do this time and time again - TVs, computers, cell phones, ..... and now cameras. When will ever learn?
I think that's the wrong perspective. Every product category has its limits. But until you hit that limit, you need to sell as many units of that particular product as you can. That's what manufacturers do. They capitalize on a product, and they sell it. It's foolish and naive to think that manufacturers should, instead, sell products at a much lower rate. What would that gain them? It only "gains" them lower sales-- and higher production costs because of lower economies of scale. Even if camera manufacturers had done that (purposely sell cameras at a slower rate), smartphone cameras still would have come along regardless! You can't stop the march of technology, and the inevitable decline in popularity of certain products. You can only sell as many of those products as you can until the day when it stops being so popular. Eventually, something is going to come along that sends your product into decline. In the mean time, manufacturers are smart to sell as many as they can until that point comes. If you're not selling to the point of "saturation", then you're just leaving money on the table.
Agreed. And like all technologies, the real improvements from model year to model year are getting fewer and fewer and harder to get excited about. Now that the smartphone can change your TV channel, operate your heating and air conditioning, take your pulse, tell you where gasoline is cheaper, replace a camera, GPS, wristwatch, and personal computer... then what is left to do next?
At some point, "feature overload" sets in, and people stop getting excited about the 20,000th new app....
Take a look at Apple. They know that every one of their products has a saturation point. They don't expect to survive on any one of their products. Computer sales would eventually hit a saturation point, so they moved on to the iPod. iPods would eventually hit a limit, so they moved on to the iPhone. iPhone would eventually hit a limit, so they brought out the iPad. Now iPad sales are hitting a saturation point, and they'll move on to something else. I think manufacturers are far more aware of "saturation and product life cycle" than you give them credit for. But from the perspective of being the armchair CEO that you are, you think, "My God, aren't they seeing this!?!? I'm so much smarter than them! Don't they realize what's happening?" The answer is yes, they know, they see, and they understand that it's a perfectly natural product arc.
Apple is a good example. To survive, a company must stay ahead of the technology, and be able to move quickly after the market saturation point is reached. It probably is important to note that many of the car builders were initially carriage builders who make the transition successfully to the new technology.
To a large extent the camera makers are adjusting to the changing market. They are making more high end cameras, more superzoom cameras, more rugged cameras.... in effect, going where the cell phone can't go. At least for now.
But the bottom line is that two thirds of their sales have evaporated in the past four years. If the CIPA numbers are to be believed, the same number of companies are fighting for a market that has shrunk by two thirds. This can't be good news for anyone in the industry.
The camera makers can improve their margins a little by selling higher end goods. But they cannot do much about a drop of 80 million cameras being sold. Many of these companies weren't profitable when the market was three times larger than it is today. Now, they may have no hope at all. This is why I see consolidation coming.
Wasn't General Motors once a dozen different companies? It started out with one brand, Buick, then kept acquiring other companies.
